City leaders in the small town of Warren knew they needed to do something when the number of in-home day cares dwindled to three, and the only day care center in town was full and still struggling financially.
“So as community leaders we said, ‘OK, we need to sit down and we need to dig into this problem. What is the solution?’” said Warren city administrator Shannon Mortenson.
That search started in 2019, but the child care challenge started much earlier.
A private child care center that opened in the town of 1,600 in 2014 was in financial trouble and ready to close a couple of years later.
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That was when accountant and parent Lindsey Buegler joined other parents trying to call attention to the issue.
"It was either get involved and beg and plead with people to somehow keep the day care open or we would have had to move," she said.
"There were seven of us directly involved with the center that would have had to move. Seven families that would have had to move had the day care closed,” Buegler recalled. “So I would say that's huge for this small city of Warren to lose seven families."
First in the state sales tax
The child care center became a nonprofit and is still open. Buegler is a board member, helping manage the Little Sprouts center.
Buegler was “floored” when voters narrowly approved the half-cent sales tax in November.
She knew there was opposition from people who questioned why they should pay a tax for a service they don’t use.
“You always hear only the squeaky wheel. So I really was shocked when it did get passed,” she said. “There was a lot of people that worked really hard and have been working really hard for seven years. It was very exciting.”
Business leaders pushed hard for the tax. They understood how a shortage of child care was limiting economic growth.
“It’s the number one factor,” said Phil Thompson who chairs the Warren Economic Development Authority and owns an accounting and crop insurance firm that employs about 30 people.
"Last week, we had three of them that brought their kids to work with them, because their day care providers were closed," Thompson said.
"If you're missing one or two employees because their kids don't have day care, that's an inconvenience,” he said. “If you can't hire young people to come to work, young accountants, because they can't get day care and they won't move here, then that affects the bottom line because we can't grow."
Shortage of slots, broken model
There’s data to back up the anecdotes. Warren partnered with the First Children’s Finance Rural Child Care Innovation Program. A supply/demand analysis found a shortage of 187 child care slots within a 20-mile radius of Warren. The research also found more than 30 percent of survey respondents had turned down a job, or withdrawn from the workforce because of child care issues.
The process helped Warren identify solutions to the child care crisis and create a plan, said First Children's Finance Associate Director for Minnesota Jessica Beyer.
The use of sales tax to fund a child care center is unique in Minnesota, but Beyer said Warren is only one of several rural communities currently trying innovative approaches, recognizing child care is a critical service with a very tenuous business model.
“It's a broken business model. It's a broken system,” said Beyer. “So state subsidies and local resources are needed to kind of maintain that affordability and workforce.”
Warren is the county seat for Marshall county. More than 400 residents commute to jobs a half hour away in regional centers like Thief River Falls, Crookston or Grand Forks-East Grand Forks.
The Warren-Alvarado-Oslo school district is based here, and voters this fall approved a $24.9 million bond issue for a school expansion. There's a clinic, hospital and nursing home. All are looking to recruit young workers.
“That's first thing they ask, especially the young families, is what kind of child care do you have,” said North Valley Health CEO Jon Linnell. “And we have to tell them the honest response is, it's tough to get child care in our community right now.”
That ends the conversation for many job applicants. Child care can also throw a wrench in daily operations at the hospital.
"That's the biggest issue when you're in health care 24/7 365,” said Linnell. “And that nurse is expecting to work and she has to go home with her child because there's no place to go with that child. So that's an immediate impact. It's not something you can plan for."
Construction in the spring
Construction is expected to start in the spring on a new building that will be designed to maximize efficiencies in required teacher-child ratios. The sales tax will raise $1.6 million, but that won’t cover the full cost of the building because construction costs have increased since the project planning began.
The city received a low interest USDA loan which will be paid back with the sales tax proceeds, and a state grant. Business leaders launched an $800,000 fundraising effort to cover the gap.
“The first day that we went out and fundraised, we raised over $400,000,” said Thompson. “We got two $100,000 donations, three $50,000 donations, a half dozen $25,000. So there's some people that are very benevolent. And they set the pace. And then we fill it in with smaller donations.”
The child care building will be owned by the city and operated by the Little Sprouts nonprofit.
City leaders expect that arrangement will help make child care more affordable.
“That's what we hope will happen is that with the debt and everything being paid, we don't have to charge as much of a lease payment to the day care center,” said Mortenson. “And they can provide affordable child care, or at least incentives to staff so that they can staff it fully.”
Staffing is a concern. Buegler said COVID relief funds have allowed Little Sprouts to increase worker pay by $2 per hour. When that funding ends in a few months, they will need to find a way to match regional market wages if they hope to recruit and retain child care workers, and they will need to double staffing for the new facility, adding about seven full-time equivalent positions.
Local business leaders doubt child care can be economically viable without government support.
Mara Hanel recently ended her four-year term as Warren mayor. She’s convinced child care needs to be a subsidized community service, not a profit-making business.
"Because it hasn't been a moneymaker, like Little Sprouts is a nonprofit in town and the home day cares aren't getting rich off of day care, so if you just are observant with what society is bringing right now, it's that parents are struggling to afford day care and it's not that the day cares are getting rich."